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What Should Investors Know About Strabag SE's (VIE:STR) Growth?

Simply Wall St

After Strabag SE's (VIE:STR) recent earnings announcement in December 2018, analyst forecasts appear to be pessimistic, with profits predicted to drop by 3.3% next year compared with the past 5-year average growth rate of 24%. Currently with a trailing-twelve-month profit of €354m, the consensus growth rate suggests that earnings will drop to €342m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Strabag in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for Strabag

How is Strabag going to perform in the near future?

The view from 5 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of STR's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

WBAG:STR Past and Future Earnings, July 27th 2019

This results in an annual growth rate of 0.03% based on the most recent earnings level of €354m to the final forecast of €351m by 2022. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of €3.41 in the final year of forecast compared to the current €3.45 EPS today. However, the expansion of the current 2.3% margin is not expected to be sustained, as it begins to contract to 2.3% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Strabag, there are three essential aspects you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Strabag worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Strabag is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Strabag? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.